Potash really fell apart on Friday, after trying to hold above the May breakout area. POT, along with many fertilizer stocks were benefiting from the reflation trade that had been occurring over the past several weeks, but that theme came to a screeching halt recently, with most commodities getting hit hard.

POT had built a promising consolidation base that looked like a large bottoming pattern from November through April. It confirmed that base, with a breakout in May that was challenging prior gap down resistance, but it stalled in that area. It then had a breakaway gap down, which never came close to even a fill attempt. While POT has shed over 35 points from its June high, it looks like it still has room for more downside. POT was attempting to hold above the prior base and May breakout area, but this struggle ended up taking the form of a small flag. It broke that flag on high volume on Friday, and it looks like probe deeper into the prior base. While this is not in a good risk reward spot for a swing trade, I am watching POT as a candidate to short on bounces. Many bulls were trapped on the failed breakout and it appears that POT will have no shortage of sellers in the $90 area.

Potash really fell apart on Friday, after trying to hold above the May breakout area. POT, along with many fertilizer stocks were benefiting from the reflation trade that had been occurring over the past several weeks, but that theme came to a screeching halt recently, with most commodities getting hit hard.

POT had built a promising consolidation base that looked like a large bottoming pattern from November through April. It confirmed that base, with a breakout in May that was challenging prior gap down resistance, but it stalled in that area. It then had a breakaway gap down, which never came close to even a fill attempt. While POT has shed over 35 points from its June high, it looks like it still has room for more downside. POT was attempting to hold above the prior base and May breakout area, but this struggle ended up taking the form of a small flag. It broke that flag on high volume on Friday, and it looks like probe deeper into the prior base. While this is not in a good risk reward spot for a swing trade, I am watching POT as a candidate to short on bounces. Many bulls were trapped on the failed breakout and it appears that POT will have no shortage of sellers in the $90 area.

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